Expanded Scrutiny Of Defense Deals Raises Scope Concerns

Ross Demain's commentary was included in a Law360 article examining the effects of a provision in the 2024 National Defense Authorization Act, known as Section 857, that expands the U.S. Department of Defense’s (DOD) ability to scrutinize mergers and acquisitions. Under the new guidance, companies involved in a potential merger or acquisition within the defense industrial base must provide notification and supplemental information to the DOD, if they are currently required to make such notifications to the U.S. Department of Justice and Federal Trade Commission under the Clayton Act, an antitrust law.

Ross said the expectation for providing information to the DOD is particularly murky when an antitrust agency proactively reaches out for further information from the parties involved in a proposed transaction. "There's … a question around the provision of information in the sense that parties who receive a second request from the DOJ or the FTC frequently will provide information to the reviewing agency over a period of weeks, or months, or longer, and how promptly information provided to the antitrust agencies needs to be provided to the Department of Defense."